Citation : WILSON -v- COXON [No 2] [2015] WASC 197

Defamation - Pleadings application - Whether matters pleaded in defence were arguably directly relevant background facts to the alleged defamatory communication - 'Burstein' principles - Whether primary judge erred in considering that the matters pleaded in the defence were not reasonably arguable having regard to the 'Burstein' principles

Defamation Act 2005 (WA), s 34, s 38(1)

Rules of the Supreme Court 1971 (WA), O 20 r 19(1)(a), O 20 r 19(1)(c)

Allmark v Mossensons (a firm) [2006] WASCA 127

Australian Broadcasting Corporation v McBride [2001] NSWCA 322; (2001) 53 NSWLR 430

Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157

Burstein v Times Newspapers Ltd [2000] EWCA Civ 338; [2001] 1 WLR 579

Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027

Channel Seven Sydney Pty Ltd v Mahommed [2010] NSWCA 335; (2010) 278 ALR 232

Gacic v John Fairfax Publications Pty Ltd [2015] NSWCA 99

Holt v TCN Channel Nine Pty Ltd [2014] NSWCA 90; (2014) 86 NSWLR 96

Jones v Pollard [1997] EMLR 233

Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14

Kirika v Zurich Australian Insurance Ltd [2002] WASCA 233

Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270

Pamplin v Express Newspapers Ltd [1988] 1 WLR 116

Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405

Scott v Sampson (1882) 8 QBD 491

Speidel v Plato Films Ltd [1961] AC 1090

Tesco Stores Ltd v Guardian News & Media Ltd [2008] EWHC B14; [2009] EMLR 5

The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40

Trumm v Norman [2008] EWHC 116 (QB)

Turner v News Group Newspapers Ltd [2006] EWCA Civ 540; [2006] 1 WLR 3469

Waller v Waller [2009] WASCA 61

Warren v The Random House Group Ltd [2008] EWCA Civ 834; [2009] QB 600

West Australian Newspapers Ltd v Elliott [2008] WASCA 172; (2008) 37 WAR 387

Wilson v Coxon [No 2] [2015] WASC 197

Wilson v Metaxas [1989] WAR 285

Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1

1 BUSS JA: The appellant has applied for leave to appeal against an interlocutory decision of Kenneth Martin J in defamation proceedings brought by the respondent, as plaintiff, against the appellant, as defendant.

2 I will refer to the appellant as the defendant and the respondent as the plaintiff.

3 The primary judge, on the plaintiff's application pursuant to O 20 r 19(1) of the Rules of the Supreme Court of Western Australia 1971 (WA), struck out par 15 of the defendant's re-amended defence filed 15 January 2015. The plea was struck out on the ground that it failed to disclose 'any reasonably arguable defence towards an arguable mitigation of the defendant's damages should she be found liable at trial' [74].

4 It was not suggested, either before his Honour or in this court, that the plea in par 15 was otherwise defective. For example, it was not suggested that the plea may embarrass the fair trial of the action.

5 I would grant leave to appeal and allow the appeal. My reasons are as follows.

6 The background facts and circumstances are set out in the reasons of Murphy JA and Corboy J. I will not repeat them except to the extent necessary to explain my reasons.

(a) he is and at all material times was the executive director of TFS Corporation Ltd (TFS), a public company whose securities are listed for quotation on the Australian Securities Exchange; and

(b) at all material times he was the executive chairman of TFS.

8 In pleading the alleged defamation, the plaintiff relies on an alleged oral statement by the defendant to a journalist of The Australian newspaper. The alleged words, as pleaded in par 3 of the statement of claim, are:

[The plaintiff] failed to vote proxies for 375,000 of my shares in TFS against his re-appointment despite me indicating on my proxy form my intention to vote against his re-appointment.

9 Next, the plaintiff pleads, amongst other things, that the words complained of, in their natural and ordinary meaning, conveyed the following imputations:

(a) the plaintiff had failed in his duty as a proxy and as an officer of TFS by not acting in accordance with directions given by a shareholder for the voting of shares in TFS on a poll of its shareholders; and

(b) by failing to act in accordance with directions given by a shareholder on a poll of TFS shareholders concerning his re-appointment as an office holder of TFS, the plaintiff put his own self-interest in being re-appointed ahead of his duty as the shareholder's proxy, and as an office holder in TFS, to act as directed.

10 The plaintiff then pleads re-publications of the alleged defamation in circumstances which, it is alleged, make the defendant liable in respect of them.

11 In her re-amended defence, the defendant denies the alleged publication, raises limitation defences, denies the alleged meanings arise, denies the alleged re-publications, relies on an offer to make amends and sought to raise, in par 15, certain matters in mitigation of damages.

15.1 The Defendant repeats paragraph 2.1 and 2.2 hereof.

[2.1 at all material times the Defendant was the legal owner of 3,453,519 ordinary fully paid shares in TFS;

2.2 at all material times Domenica Nominees Pty Ltd (Domenica) held 375,000 ordinary fully paid shares in TFS on bare trust for the Defendant;]

15.2 At all material times the Defendant was entitled to direct Domenica to transfer legal ownership of the shares to the Defendant.

15.3 At all material times the Defendant had an entitlement to direct Domenica how to vote the shares.

15.4 At all material times the Plaintiff was a director and secretary of and had effective control of Domenica.

15.5 On or about 7 November 2011 and 25 January 2012 the Defendant requested the Plaintiff to cause Domenica to transfer legal ownership of the 375,000 shares to the Defendant.

15.6 On or about 26 January 2012 the Plaintiff responded to the request by asking that the transfer of the legal ownership of the shares be deferred for reasons related to the Plaintiff's convenience.

15.7 By 7 December 2012, Domenica had not transferred the 375,000 shares to the Defendant.

15.8 On 17 October 2012, TFS announced to the ASX that its AGM would be held on 15 November 2012, which is the date on which it was held.

15.9 The Defendant was a signatory to two notices to TFS, which were signed by the Defendant on or about 15 October and 8 November 2012. The notices were delivered to TFS on or about 15 October and 8 November 2012 and came to the attention of the Plaintiff prior to the AGM of TFS held on 15 November 2012. The notices (amongst other matters):

(c) [sic] put TFS on notice of the signatories' intention to move a resolution for the removal of the Plaintiff as a director of TFS;

(d) [sic] requested that TFS call a general meeting to consider and vote on a resolution that the Plaintiff be removed as a director of TFS.

15.10 The Defendant lodged a proxy form for the AGM appointing the Chairman, who was the Plaintiff, as her proxy and stated that she wished the Plaintiff to vote against the resolution for his re-election as a director of TFS.

15.11 By reason of the matters particularised at paragraphs 15.1 to 15.10 above the Plaintiff knew that it was the Defendant's wish that the 375,000 shares held by Domenica on bare trust for the Defendant be voted against the Plaintiff's re-election as a director of TFS.

15.12 The Plaintiff did not cause Domenica to vote the 375,000 shares against his re-election as a director of TFS.

The principles governing the strike out application

13 The principles applicable to the determination of the strike out application are well established. It is sufficient to refer to the observations of Steytler J (Malcolm CJ & Murray J agreeing) in Mickelberg v 6PR Southern Cross Radio Pty Ltd [2002] WASCA 270. The observations were made in the context of an application to strike out a statement of claim, but they apply by analogy to an application to strike out a defence. His Honour said:

Generally speaking, a statement of claim should not be struck out unless the propositions advanced are really not arguable (see Packhard v Transport Trading & Agency Co Ltd [1912] WALawRp 44; (1912) 14 WALR 191 at 195) and great care must be exercised to ensure that the plaintiff is not improperly deprived of her opportunity for the trial of her case by the appointed tribunal (General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130), although argument, even extensive argument, may be necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot succeed (General Steel Industries, above, ibid). On an application to strike out, the facts alleged in the statement of claim should be accepted as true (Niven v Grant [1904] VicLawRp 14; (1903) 29 VLR 102 at 106) and, as a general rule, a plaintiff is entitled as of right to have her case heard, to have the facts found and then to argue the question of law as it arises before the trial Judge upon the facts as found. The pleading should only be struck out where it can be seen from the outset that, however the facts might be found, there is no basis for the legal conclusion contended for by the plaintiff (see Dalgety Australia Ltd v Rubin, unreported; FCt SCt of WA; Library No 5485; 24 August 1984). The Court at first instance should be careful not to risk stifling the development of the law by the summary rejection of a claim which might raise the possibility that, as the law develops, a cause of action will be found to lie (Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 373). See also, generally in respect of the aforegoing, Kimberley Downs Pty Ltd v Western Australia, unreported, SCt of WA (Staples M); Library No 6414; 25 August 1986 and Seaman: Civil Procedure Western Australia par 20.19.6 [29].

See also Kirika v Zurich Australian Insurance Ltd [2002] WASCA 233 [6] (Wheeler J, Murray & Miller JJ agreeing); Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [49] (Roberts-Smith JA, Wheeler JA agreeing).

The statutory principles relating to the plea in par 15 of the re-amended defence

14 Section 34 of the Defamation Act 2005 (WA) provides that, in determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is 'an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded'.

15 By s 38(1) of the Act, evidence is admissible on behalf of the defendant, in mitigation of damages for the publication of defamatory matter, in relation to a number of specified matters. The substance of the plea in par 15 of the re-amended defence is not within any of the matters specified in s 38(1). However, by s 38(2), nothing in s 38(1) operates 'to limit the matters that can be taken into account by a court in mitigation of damages'.

The common law principles relating to the plea in par 15 of the re-amended defence

16 In Scott v Sampson (1882) 8 QBD 491, it was held that, while general evidence of the plaintiff's bad reputation is admissible in mitigation of damage in defamation actions, evidence of specific acts of misconduct by the plaintiff is inadmissible. The rationale for the exclusionary rule is pragmatism and fairness. In Speidel v Plato Films Ltd [1961] AC 1090, the House of Lords approved the principle in Scott.

17 In Burstein v Times Newspapers Ltd [2000] EWCA Civ 338; [2001] 1 WLR 579, the Court of Appeal (Aldous, May LJJ & Sir Christopher Slade) held that the judgment in Speidel did not make evidence of 'directly relevant background context', in mitigation of damage in a defamation action, inadmissible [40] - [42].

18 In Turner v News Group Newspapers Ltd [2006] EWCA Civ 540; [2006] 1 WLR 3469, the appellant, who was the plaintiff/claimant in a libel action, contended that Burstein was decided per incuriam, that it could not be reconciled with Speidel and that it was unworkable in practice [28]. The Court of Appeal (Pill, Keene & Moses LJJ) rejected that contention. Keene LJ, who delivered the judgment of the Court, explained that:

(a) The exclusionary rule in Scott has never been absolute [42].

(b) The essence of the principle remains, as May LJ stressed in Burstein, that generally a plaintiff/claimant cannot be subjected to a roving inquiry into aspects of his or her life unconnected with the subject matter of the alleged defamation, and specific evidence relating to such aspects cannot be called in mitigation of damage [42].

(c) However, the position is different in relation to evidence of matters 'directly relevant to the alleged [defamation]', as is apparent from cases like Pamplin v Express Newspapers Ltd [1988] 1 WLR 116, where the defendants were allowed to rely, in mitigation of damage, on evidence adduced in support of a plea of justification which ultimately failed [43]. It has long been established that evidence of 'specific acts properly admitted on such a plea may [nonetheless] be taken into account by the [court] when assessing damages even though the plea has failed' [43].

(d) However, to be used for this purpose, evidence of matters 'directly relevant to the alleged [defamation]' must relate to 'the relevant sector of the plaintiff's life' [45]. See Jones v Pollard [1997] EMLR 233, 251 - 252 (Hirst LJ). That is, the evidence must relate to the sector of the plaintiff's/claimant's reputation with which the imputations relied on by the plaintiff/claimant were concerned.

(e) The difficulty with Burstein was that the primary judge in that case had struck out the defendant's plea of fair comment before evidence had been called and, consequently, background facts relevant to the defamatory publication could not be considered by the court in the assessment of damages [50].

(f) By ruling that the evidence in question was admissible, the Court of Appeal in Burstein had merely developed the common law beyond the point which it had reached in 1961 when Speidel was decided [51].

19 It has been observed, on a number of occasions, that the true ratio or ratios of the decision in Burstein are not easy to ascertain. See Tesco Stores Ltd v Guardian News & Media Ltd [2008] EWHC B14; [2009] EMLR 5 [55] (Eady J). Keene LJ acknowledged in Turner that it was inevitable that cases would occur where it was not easy to determine whether the test in Burstein was met or not, and that there was a need for the courts to proceed 'with some caution' in applying Burstein, given that it represented a modification of the long-standing rule in Scott [56]. In West Australian Newspapers Ltd v Elliott [2008] WASCA 172; (2008) 37 WAR 387, Steytler P (McLure JA relevantly agreeing) said that the scope of the decision in Burstein was 'to some extent uncertain and its application may be difficult in particular cases' [63]. See also Channel Seven Sydney Pty Ltd v Mahommed [2010] NSWCA 335; (2010) 278 ALR 232 [262] - [266] (McColl JA, Spigelman CJ & Beazley JA relevantly agreeing, McClellan CJ at CL & Bergin CJ in Eq agreeing).

20 However, in Warren v The Random House Group Ltd [2008] EWCA Civ 834; [2009] QB 600, the Court of Appeal (Sir Anthony Clarke MR, May & Wilson LJJ) held that Burstein was authority for 'two important interlocking propositions' [78]. First, as to the court's assessment of damages for defamation, a defendant may seek to rely on such facts as falling within the 'directly relevant background context' to the defamatory publication. See Burstein [42] (May LJ). Secondly, it is illogical and undesirable that a defendant can seek to rely on such facts in relation to the assessment of damages only if he or she has pleaded or particularised them as part of a substantive defence to liability (notably, within a plea of justification). The defendant can rely on them as freestanding matters pleaded as relevant only to mitigation in the assessment of damages. See Burstein [47] (May LJ).

21 The decision in Burstein was referred to with approval in Australian Broadcasting Corporation v McBride [2001] NSWCA 322; (2001) 53 NSWLR 430 [14] - [15] (Ipp AJA, Beazley JA agreeing), [86] (Fitzgerald AJA). Also, in Holt v TCN Channel Nine Pty Ltd [2014] NSWCA 90; (2014) 86 NSWLR 96, Macfarlan JA (Gleeson JA agreeing) said:

The law is undoubtedly concerned 'to prevent [defamation] trials from becoming roving inquiries into the plaintiff's reputation, character or disposition' (Burstein v Times Newspapers Ltd [2000] EWCA Civ 338; [2001] 1 WLR 579 at [35]; McBride at [16]) ... The policy is manifested by the rule that, in general, evidence of 'particular acts of misconduct on the part of the plaintiff tending to show his character and disposition', as distinct from evidence of general bad reputation, is inadmissible in mitigation of damages: Gatley on Libel and Slander, 11th ed (2008), Sweet & Maxwell at [35.30]. This rule does not apply to evidence, such as led in Burstein, of particular facts which are directly relevant to the contextual background in which a defamatory publication came to be made. Nor is it applicable where, as described in Pamplin and as was the case here, the evidence is properly before the court on another issue [32].

See also Gacic v John Fairfax Publications Pty Ltd [2015] NSWCA 99 [190] - [209] (McColl JA, Barrett JA relevantly agreeing).

22 According to Gatley on Libel and Slander (12th ed, 2013):

It appears ... that a degree of connection between the subject matter of the libel and the Burstein particulars is required, both in terms of similarity of allegation and in terms of closeness in time; or, at least, that the more different the allegations are from the libel, and the further away in time, the less likely the Burstein particulars are to be allowed. That is hardly surprising, because an allegation of some entirely distinct behaviour, especially taking place at a long remove from the matters alleged in the libel, could not easily be described as directly relevant background context [33.46].

23 In Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027, Lord Hailsham of St Marylebone LC said that in assessing damages for libel '[t]he bad conduct of the plaintiff himself may also enter into the matter', and the plaintiff's damages may be reduced 'where he has provoked the libel, or where perhaps he has libelled the defendant in reply' (1071).

24 In Burstein, May LJ (Aldous LJ agreeing & Sir Christopher Slade relevantly agreeing) made these comments on the issue of provocation by, and other conduct of, the plaintiff which relates principally to activities that are causally connected to the defendant's publication of the libel:

Paragraphs 33.44 to 33.46 of Gatley on Libel and Slander, at pp 850 - 851, explain that the extent to which the claimant's own conduct is admissible in reduction of damages is limited. It is said to relate principally to activities that can be causally connected to the publication of the libel of which the plaintiff complains. A defamatory publication is not justified or excused by showing that the claimant himself has been guilty of similar conduct. But where a claimant has made a defamatory publication against the defendant which may fairly be said to have provoked the defamatory publication by the defendant of which the claimant complains, evidence of the claimant's conduct is admissible. It can sensibly be said in these circumstances that the claimant's conduct was causally connected with the defamatory publication of which he complains and that he brought it upon himself. In the present case, there was no causal connection whatever between anything the claimant may have said or done in 1994 or subsequently which provoked the defendant newspaper to publish the words complained of. The claimant simply never made a defamatory publication against the newspaper. But Gatley on Libel and Slander, p 851, para 33.46, suggests the possibility that this area of admissible evidence in reduction of damages may not be so narrowly confined. Reference is made to a passage in the judgment of Blackburn J in Kelly v Sherlock (1866) LR 1 QB 686, 698. For a number of reasons, I do not consider this particular old case helpful in the modern procedural context. It was decided before the Judicature Acts 1873 (36 & 37 Vict c 66) and 1875 (38 & 39 Vict c 77), let alone the Civil Procedure Act 1997. There was no issue about whether the evidence in question was admissible: it had already been admitted. Blackburn J's remarks were not centrally relevant to the point in issue which was whether the one farthing damages awarded by the jury was so palpably too little that the court should order a new trial.

It seems to me that it is intrinsically just that a court assessing libel damages should receive evidence to the effect that the claimant's conduct has directly provoked the publication of which he complains. Typically, if there were a heated slanging match between claimant and defendant, and the publication complained of was in retaliation to a publication by the claimant defamatory of the defendant, there would be no sense or justice in excluding evidence of the claimant's publication. It would be part of the context in which the publication complained of was made and should normally, depending on the facts, be admitted whether or not it would be likely to reduce the claimant's award of damages. It may be supposed that a claimant who brings a defamatory publication on himself will normally receive a lower award of damages than a claimant who has been defamed without provocation. There is ample support in decided cases for admitting evidence of this kind of direct provocation: see for example Broome v Cassell & Co Ltd [1972] UKHL 3; [1972] AC 1027, 1071 [24] - [25].

25 Sir Christopher Slade made these remarks in Burstein on provocation by, and other conduct of, the plaintiff which relates principally to activities that are causally connected to the defendant's publication of the libel:

Gatley on Libel and Slander, pp 850 - 851, para 33.44, states that while the conduct of the plaintiff is a factor that a jury can take into account when assessing damage, '"conduct" in this context does not encompass the general behaviour of the plaintiff; it relates principally to activities that can be causally connected to the publication of the libel of which the plaintiff complains, though it might include more broadly provocative actions by the plaintiff'. Justice obviously requires the admissibility of evidence as to actions by a plaintiff which have directly provoked the libel in question. In the present case, however, as May LJ has pointed out, nothing which the claimant may have said or done in 1994 or subsequently can be said to have caused or provoked the defendant newspaper to publish the words complained of [57].

26 In Trumm v Norman [2008] EWHC 116 (QB), Tugendhat J reduced the plaintiff's/claimant's award of damages because he had made unnecessarily provocative and offensive publications about a trade union and its officers, including the defendant, prior to the defendant publishing the libel [52] - [55].

27 Gatley (12th ed) expresses the following views:

The conduct of the claimant is a factor that the court can take into account when assessing damages, but 'conduct' in this context relates in particular (but not exclusively) to activities that can be causally connected to the publication of the libel of which the claimant complains, such as direct provocation. It might exceptionally include more broadly provocative actions by the claimant [33.51]. (footnotes omitted)

28 The primary judge, in addressing the issue of provocation, set out at [47], [49] and [50] the relevant passages from the speech of May LJ in Burstein [24] - [25]. Also, his Honour reproduced at [53] the following remarks of Sir Christopher Slade in Burstein [57]:

Justice obviously requires the admissibility of evidence as to actions by a plaintiff which have directly provoked the libel in question. In the present case, however, as May LJ has pointed out, nothing which the claimant may have said or done in 1994 or subsequently can be said to have caused or provoked the defendant newspaper to publish the words complained of.

29 His Honour then said that '[Sir Christopher Slade's] remarks would be of equal application to present circumstances [and accordingly] to the extent that the defendant strains for some "provocation" platform to support par 15, arising from Burstein, I reject that as untenable' [54].

30 The primary judge's reasons for striking out par 15 of the re-amended defence were these:

(a) There were 'no arguable act(s) of provocation by [the] plaintiff which it would be necessary or just for a jury to consider in evaluating the defendant's alleged utterance and the defamatory imputations said to arise from it' [74(1)].

(b) The relevant sector of the plaintiff's life 'encompassed within [the] diverse imputations relied upon arising from the utterance' is 'the corporate sector, concerning his professional engagement as a director and officer of a public corporation, particularly as an officer who chairs shareholder general meetings of public corporations' [74(5)].

(c) The plea in par 15 '[does] not arguably address, or engage against damage to the plaintiff's reputation in the (corporate) sector of his life, which is the subject of his imputations' [74(7)].

(d) The plea in par 15 '[does not] properly engage against, or answer questions as to the level of injury to the plaintiff's feelings - upon publication of the utterance and the establishment of one or more of the innuendos he complains of' [74(8)].

(e) The plea in par 15 'largely [seeks] to rationalise, distract from, or downplay, what is otherwise the fundamental factual error inherent within the utterance by the defendant ... (if proved)' [74(9)]. The factual error is 'over the non-existence of any proxy instruction from her to the plaintiff for a directed vote of 375,000 ordinary fully paid shares in TFS'. It appears 'clear that there never was and could never lawfully have been from the defendant, as the non-legal owner of shares, a proxy instruction concerning 375,000 shares, which were not then in her name legally' [74(9)].

(f) The plea in par 15 is 'not arguably probative, relevant or contextual in [its] formulation, by way of being mitigation of damages considerations' [74(10)].

(g) The 'gravamen of ... par 15 ... is that [it is] essentially diversionary or argumentative' [74(11)]. The plea seeks to '[obscure] the wound to the plaintiff's corporate reputation' and seeks to raise 'what is, in reality, an unrelated side issue' [74(11)]. His Honour elaborated on the 'unrelated side issue' as follows:

[The matters in par 15] seek to raise ... an unrelated side issue - over the argued omission by the plaintiff to take steps to cause a trustee corporation of which he was a director (Domenica) to vote the 375,000 shares that were then held on a bare trust for the defendant at the TFS general meeting, against the plaintiff's nomination for re-election to the board as a director of TFS. But a collateral grievance over Mr Wilson's alleged inaction as a trustee, or a controlling officer of a trustee corporation such as Domenica - is remote and distinct to [sic] the reputational injury arising out of his alleged corporate misbehaviour, as would be inflicted under the utterance imputations, if established [74(11)].

(h) A grievance over 'conduct by omission by ... the controller of a corporate trustee ... is too distant from a more confined innuendo grievance raised by [the plaintiff], concerning his alleged disregarding of an express proxy instruction given to him as a chairman of a [publicly] listed corporation's general meeting of shareholders' [74(12)].

31 His Honour concluded that, on his assessment, the plea in par 15 involved 'potentially injecting into the trial for no good reason facts amounting to something of a diversionary "smokescreen"' [75]. It was, in his Honour's view, 'logistically feasible and in the interests of sensible case management, not to mention the overall administration of justice', for the issues raised by par 15 'to be determined now, prior to them possibly erupting as unnecessary distractions during the course of the trial' [76].

Hence par 15 should be struck out, as failing to disclose a reasonably arguable defence (in a sense of it not arguably raising matters that are legitimate to admit into evidence at the trial, in a context of assessing arguments upon issues bearing upon some aspect of a degree of mitigation in the level of damages the plaintiff would be entitled to receive at trial, were he to be otherwise successful upon issues of liability) [78].

The principles governing the grant of leave to appeal

33 The primary judge's decision was interlocutory in character and leave to appeal is therefore required.

34 In general, an applicant for leave must demonstrate that the relevant decision was wrong or at least attended with sufficient doubt to justify the grant of leave, and that substantial injustice would occur if the decision were left unreversed. See Wilson v Metaxas [1989] WAR 285, 294 (Malcolm CJ, Brinsden & Smith JJ agreeing).

35 The concept of 'substantial injustice', in this context, is concerned with the substantive rights of the applicant for leave. It is necessary for the applicant to demonstrate that the relevant decision will cause the applicant more than mere inconvenience or procedural disadvantage. See Waller v Waller [2009] WASCA 61 [9] - [10] (Martin CJ); Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14 [81] (Mitchell J, Martin CJ agreeing & Buss JA agreeing generally).

36 It must be emphasised, however, that the requirements stated in Wilson v Metaxas are not rigid or exhaustive, and leave may be granted if, in all the circumstances, it is in the interests of justice to grant leave. See The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 56 - 57 (Malcolm CJ, Rowland & Walsh JJ agreeing).

38 Ground 1 alleges, in substance, that his Honour erred in deciding that the only matter of provocation which can be raised in the defence of an action for defamation is provocation by the plaintiff having previously published defamatory matter concerning the defendant.

39 Ground 2 alleges, in substance, that his Honour should have held that evidence of conduct by a plaintiff which has caused or provoked the defamatory publication is admissible in the defence of an action for defamation, and that, in the present case, the defendant was entitled, or alternatively arguably entitled, to raise the matters pleaded in par 15 of the re-amended defence in her defence and, accordingly, par 15 should not have been struck out.

40 Ground 3 alleges, in substance, that his Honour erred in deciding that the plea in par 15 was not directly relevant background context which was admissible in assessing the damage that the alleged defamatory publication had caused the plaintiff.

41 Ground 4 alleges, in substance, that his Honour should have held that the matters pleaded in par 15 were background context which was directly relevant to the damage that the alleged defamatory publication had caused the plaintiff, and that the defendant was entitled, or alternatively arguably entitled, to raise those matters in her defence and, accordingly, par 15 should not have been struck out.

The merits of the application for leave and of the appeal

42 I am satisfied that grounds 3 and 4 have been made out. In particular, the primary judge erred in deciding that it was not reasonably arguable that the matters pleaded in par 15 of the re-amended defence were 'directly relevant background context' that was admissible in assessing the damage caused to the plaintiff by the alleged defamatory publication. My reasons for concluding that error has been established are these.

43 First, there appears to be no doubt that at the trial the plaintiff will rely on:

(a) the distinction at law between the shares in TFS of which the defendant was the registered holder and the shares in TFS which the defendant beneficially owned but of which she was not the registered holder; and

(b) the contention of law that any proxy lodged by the defendant did not apply to the 375,000 shares in TFS which were beneficially owned by her but of which Domenica was the registered holder.

44 Secondly, although there appears to be no doubt that at the trial the plaintiff will rely on that distinction and that contention, par 15 of the re-amended defence alleged, in substance, that:

(a) at all material times, Domenica held the 375,000 shares in question on bare trust for the defendant;

(b) at all material times, the defendant was entitled to direct Domenica to transfer legal ownership of the shares to the defendant;

(c) at all material times, the defendant had an entitlement to direct Domenica how to vote the shares;

(d) at all material times, the plaintiff was a director and secretary of Domenica and effectively controlled the company;

(e) on or about 7 November 2011, and again on 25 January 2012, the defendant had requested the plaintiff to cause Domenica to transfer legal ownership of the shares to the defendant;

(f) as at 15 November 2012 (when the annual general meeting of TFS was held) and, also, throughout the period between 16 November 2012 and 7 December 2012 (when the defendant made the alleged oral statement to the journalist of The Australian newspaper which was allegedly defamatory of the plaintiff), Domenica had not transferred legal ownership of the shares to the defendant;

(g) at all material times, the plaintiff knew that it was the defendant's wish that the shares be voted against the plaintiff's re-election as a director of TFS; and

(h) the plaintiff, who was the chairman of the annual general meeting of TFS held on 15 November 2012, did not cause Domenica to vote the shares against his re-election as a director of TFS.

45 Thirdly, it is at least reasonably arguable that the matters pleaded in par 15 of the re-amended defence were 'directly relevant background context' to the alleged defamatory publication, in that:

(a) The matters pleaded in par 15 make, relevantly and in substance, the allegation that the plaintiff, in the context of his role as the chairman of the annual general meeting of TFS held on 15 November 2012, engaged in sharp practice and advanced his self-interest by failing to cause Domenica to vote the 375,000 shares in question against his re-election as a director of TFS. In other words, notwithstanding the plaintiff's knowledge of what the defendant was seeking to achieve in relation to the 375,000 shares and the manner in which she wanted those shares to be voted, the plaintiff made a positive decision, to his own advantage and contrary to the interests of the defendant, not to vote those shares against his proposed re-election.

(b) The matters pleaded in par 15, at least arguably, related directly to 'the relevant sector of the plaintiff's life', as identified by the primary judge, namely 'the corporate sector, concerning his professional engagement as a director and officer of a public corporation, particularly as an officer who chairs shareholder general meetings of public corporations' [74(5)]. In particular, those matters, at least arguably, related directly to the plaintiff's conduct in relation to his proposed re-election as a director of TFS and not merely to his conduct as a director of Domenica. There was, at least arguably, a sufficient degree of connection, both in subject matter and temporally, between the matters pleaded in par 15, on the one hand, and the alleged defamation, on the other.

(c) The matters pleaded in par 15, if established at the trial, should, at least arguably, be taken into account in the court's assessment of damages if the alleged defamation is proved and the defendant's defences fail.

46 Fourthly, the primary judge, after identifying the relevant sector of the plaintiff's life, failed properly to characterise the matters pleaded in par 15 of the re-amended defence. In particular, his Honour characterised the matters pleaded in par 15:

(a) as merely 'a collateral grievance over [the plaintiff's] alleged inaction as ... a controlling officer of a trustee corporation such as Domenica', whereas his Honour should have characterised those matters as, at least arguably, directly relevant to the plaintiff's role as the chairman of the general meeting of TFS held on 15 November 2012 and to his proposed re-election as a director of TFS; and

(b) as 'remote and distinct to [sic]' the relevant sector of the plaintiff's life, whereas he should have characterised those matters as, at least arguably, of direct relevance to that sector.

47 It is unnecessary separately to consider grounds 1 and 2.

48 In my opinion, it is in the interests of justice to grant leave to appeal. The defendant has demonstrated that the primary judge's decision to strike out par 15 of the re-amended defence was wrong. The striking out of par 15 will preclude the defendant from adducing evidence at the trial in relation to the matters pleaded in par 15. Consequently, if the plaintiff

succeeds on liability at the trial, damages will be assessed, at least arguably, other than in the proper factual context and according to law. The attainment of justice as between the parties will not be promoted if the issue in dispute is not dealt with now and the trial of the action miscarries in relation to damages. Any such miscarriage is unlikely to be capable of rectification on appeal without a retrial. The defendant has therefore demonstrated that his Honour's decision will cause her more than mere inconvenience or procedural disadvantage. The defendant may well suffer a substantial injustice at the trial in relation to a substantive right if the decision were left unreversed. She may also be at a material disadvantage at any mediation of the dispute prior to the trial.

49 Leave to appeal should be granted and the appeal allowed.

50 This is an application for leave to appeal against a decision of Kenneth Martin J: Wilson v Coxon [No 2] (primary reasons).[1] The primary proceedings concern a defamation action commenced by the respondent as plaintiff, against the appellant as defendant. It is convenient to refer to the appellant and the respondent as, respectively, the defendant and the plaintiff in these reasons.

51 His Honour struck out a plea in the defence filed by the defendant and the defendant seeks leave to appeal against that decision. The plea alleged matters in mitigation of damages said to fall within the principles outlined by the English Court of Appeal in Burstein v Times Newspapers Ltd.[2] The defendant's plea was struck out on an application by the plaintiff. The plaintiff alleged that the plea disclosed no reasonably arguable defence, or was embarrassing.[3] Presumably the plaintiff made the application under O 20 r 19(1)(a) and O 20 r 19(1)(c) of the Rules of the Supreme Court 1971 (WA) (RSC).

52 The plaintiff's action concerns a statement allegedly made by the defendant to a journalist in late 2012. The statement was allegedly to the effect that the plaintiff had 'failed to vote proxies' for 375,000 of the defendant's shares in a company referred to in the primary reasons, and herein, as 'TFS' 'against [the plaintiff's] re-appointment despite [the defendant] indicating on [her] proxy form [her] intention to vote against his re-appointment'.[4]

53 The statement of claim alleges that the defendant held a total of 3,828,519 shares in TFS, of which only 3,453,519 were held 'non-beneficially'.[5] The implication is that the other 375,000 were held 'beneficially'. The defendant addresses this plea in her defence and says that she was the legal owner of 3,453,519 shares in TFS and that she was the beneficial owner of 375,000 shares in TFS, with the legal owner being a company called Domenica Nominees Pty Ltd (Domenica), which held the shares on bare trust for her.[6]

54 It is alleged in the statement of claim, in effect, that the statement was defamatory of the plaintiff in that it conveyed the following meanings:

(a) the plaintiff had failed in his duty as an officer of a corporation by not acting in accordance with directions given by a shareholder for the voting of shares in a poll of its shareholders;

(b) by failing to act in accordance with the directions of a shareholder on a poll of shareholders concerning his reappointment as an officeholder, the plaintiff put his self-interest ahead of his duties;

(c) the plaintiff failed his duty as an executive chairman of a listed corporation by not acting in accordance with such directions;

(d) by failing to act as a proxy, on a poll concerning his reappointment as executive chairman, the plaintiff put his self-interest ahead of his duty as the shareholder's proxy and executive chairman of the company to act as directed;

(e) in failing to vote on a shareholders' resolution at the 2012 annual general meeting of a listed corporation of which he was the chair, in the manner specified in a proxy held by him, he had committed an offence contrary to the Corporations Act 2001 (Cth).

55 The defendant's plea, which was struck out by the primary judge, was contained in par 15 of the defence, and was set out in full by his Honour in his reasons for judgment:[7]

15.1 The Defendant repeats paragraph 2.1 and 2.2 hereof.

[2.1 at all material times the Defendant was the legal owner of 3,453,519 ordinary fully paid shares in TFS;

2.2 at all material times Domenica Nominees Pty Ltd (Domenica) held 375,000 ordinary fully paid shares in TFS on bare trust for the Defendant;]

15.2 At all material times the Defendant was entitled to direct Domenica to transfer legal ownership of the shares to the Defendant.

15.3 At all material times the Defendant had an entitlement to direct Domenica how to vote the shares.

15.4 At all material times the Plaintiff was a director and secretary of and had effective control of Domenica.

15.5 On or about 7 November 2011 and 25 January 2012 the Defendant requested the Plaintiff to cause Domenica to transfer legal ownership of the 375,000 shares to the Defendant.

15.6 On or about 26 January 2012 the Plaintiff responded to the request by asking that the transfer of the legal ownership of the shares be deferred for reasons related to the Plaintiff's convenience.

15.7 By 7 December 2012, Domenica had not transferred the 375,000 shares to the Defendant.

15.8 On 17 October 2012, TFS announced to the ASX that its AGM would be held on 15 November 2012, which is the date on which it was held.

15.9 The Defendant was a signatory to two notices to TFS, which were signed by the Defendant on or about 15 October and 8 November 2012. The notices were delivered to TFS on or about 15 October and 8 November 2012 and came to the attention of the Plaintiff prior to the AGM of TFS held on 15 November 2012. The notices (amongst other matters):

(c) [sic] put TFS on notice of the signatories' intention to move a resolution for the removal of the Plaintiff as a director of TFS;

(d) [sic] requested that TFS call a general meeting to consider and vote on a resolution that the Plaintiff be removed as a director of TFS.

15.10 The Defendant lodged a proxy form for the AGM appointing the Chairman, who was the Plaintiff, as her proxy and stated that she wished the Plaintiff to vote against the resolution for his re-election as a director of TFS.

15.11 By reason of the matters particularised at paragraphs 15.1 to 15.10 above the Plaintiff knew that it was the Defendant's wish that the 375,000 shares held by Domenica on bare trust for the Defendant be voted against the Plaintiff's re-election as a director of TFS.

15.12 The Plaintiff did not cause Domenica to vote the 375,000 shares against his re-election as a director of TFS.

56 The primary judge observed that par 15 of the defence was raised by the defendant as a plea in mitigation of any damages.[8] His Honour summarised the interlocutory dispute in the following terms:[9]

This latest interlocutory application, as will be seen, is brought by the plaintiff upon the basis that the defendant's attempted invocation of principles allowing the pleading of matters purely in mitigation against damages should it fail on liability at trial is flawed. This clash of positions arises out of the Court of Appeal of England and Wales decision in Burstein v Times Newspapers Ltd. The plaintiff argues that, correctly evaluated, par 15 of the defendant's re-amended defence is a misconceived attempt at deploying Burnstein [sic] in circumstances where it is not available to the defendant.

57 His Honour observed that neither party contended that the Burstein decision was wrong, or should not be applied in Western Australia.[10]

58 Having set out various passages of the decision in Burstein, his Honour found that there was no preceding publication by the plaintiff that might, even arguably, fall within the possible application of a 'provocation principle' emerging from the decision in Burstein.[11] In that regard, his Honour found that '[t]he relevant sector of the plaintiff's life' affected by the defamation was the 'corporate sector, concerning his professional engagement as a director and officer of a public corporation, particularly as an officer who chairs shareholder general meetings of public corporations'.[12]

59 His Honour further found that the matters pleaded in par 15 of the defence were not concerned with 'directly relevant background context' within the principles discussed in Burstein.[13] In particular, his Honour found:

(a) the matters alleged in par 15 were not arguably relevant to an assessment of damages in relation to the plaintiff's reputation in the corporate sector of his life;[14]

(b) the matters alleged in par 15 were not arguably relevant to an assessment of damages in relation to the plaintiff's injured feelings.[15]

60 Accordingly, his Honour concluded that par 15 failed to disclose a reasonably arguable defence in the sense 'of it not arguably raising matters that are legitimate to admit into evidence at the trial, in a context of assessing arguments upon issues bearing upon some aspect of a degree of mitigation in the level of damages the plaintiff would be entitled to receive at trial ...'[16]

61 His Honour did not find that par 15 of the defence was embarrassing.

62 For present purposes, it is convenient to set out certain aspects of the judgment of May LJ (with whom Sir Christopher Slade and Aldous LJ agreed) in Burstein. The first concerns his Lordships discussion of 'provocation' of the defamatory publication by the claimant:[17]

Paragraphs 33.44 to 33.46 of Gatley on Libel and Slander, at pp 850-851, explain that the extent to which the claimant's own conduct is admissible in reduction of damages is limited. It is said to relate principally to activities that can be causally connected to the publication of the libel of which the plaintiff complains. A defamatory publication is not justified or excused by showing that the claimant himself has been guilty of similar conduct. But where a claimant has made a defamatory publication against the defendant which may fairly be said to have provoked the defamatory publication by the defendant of which the claimant complains, evidence of the claimant's conduct is admissible. It can sensibly be said in these circumstances that the claimant's conduct was causally connected with the defamatory publication of which he complains and that he brought it upon himself.

...

It seems to me that it is intrinsically just that a court assessing libel damages should receive evidence to the effect that the claimant's conduct has directly provoked the publication of which he complains. Typically, if there were a heated slanging match between claimant and defendant, and the publication complained of was in retaliation to a publication by the claimant defamatory of the defendant, there would be no sense or justice in excluding evidence of the claimant's publication. It would be part of the context in which the publication complained of was made and should normally, depending on the facts, be admitted whether or not it would be likely to reduce the claimant's award of damages. It may be supposed that a claimant who brings a defamatory publication on himself will normally receive a lower award of damages than a claimant who has been defamed without provocation. There is ample support in decided cases for admitting evidence of this kind of direct provocation: see for example Broome v Cassell & Co Ltd [1972] UKHL 3; [1972] AC 1027, 1071.

63 The second aspect relates to his Lordship's observations concerning differentiating between a 'roving inquiry' into aspects of the plaintiff's life, unconnected with the subject matter of the defamatory publication, which is impermissible, and 'directly relevant background facts' which are or may be admissible:[18]

It will, generally speaking, normally be both unfair and irrelevant if a claimant complaining of a specific defamatory publication is subjected to a roving inquiry into aspects of his or her life unconnected with the subject matter of the defamatory publication. It is also in accordance with the overriding objective that evidence should be properly confined, both in its subject matter and its duration, to that which is directly relevant to the subject matter of the publication. Thus under the Civil Procedure Rules, the court now has ample power to deal justly with the problems which, in the main, gave rise to the first and third limbs of the decision in Scott v Sampson 8 QBD 491.

Considering the decision as to admissibility which the judge had to make in the present case in the first instance as a matter of case management and of what is just, I consider that some parts of the particulars on which the defendants wanted to rely should have been admitted. There was a background context to the defamatory publication. To keep that away from the jury was, I think, to put them in blinkers. To determine the relevant background context and to confine it properly, it is necessary to start with the defamatory publication itself.

...

In my view, permitting the defendants to rely on the directly relevant background context in the way in which I have described would not offend anything said in Scott v Sampson 8 QBD 491 or Speidel v Plato Films Ltd [1961] AC 1090. The material to which I have referred as directly relevant background context was, as I have indicated, recognised in Speidel v Plato Films Ltd as being admissible as the circumstances in which the publication came to be made. ... For practical purposes, every publication has a contextual background, even if the publication is substantially untrue. In addition, the evidence which Scott v Sampson excludes is particular evidence of general reputation, character or disposition which is not directly connected with the subject matter of the defamatory publication. It does not exclude evidence of directly relevant background context. To the extent that evidence of this kind may also be characterised as evidence of the claimant's reputation, it is admissible because it is directly relevant to the damage which he claims has been caused by the defamatory publication.

In my view, these authorities show that it is not permissible to advance an unsustainable defence of justification and thereby, under the guise of particulars of justification, seek to rely on particulars which Scott v Sampson 8 QBD 491 and Speidel v Plato Films Ltd [1961] AC 1090 would not permit. That, however, does not prevent a defendant from frankly accepting that there is no proper plea of justification, but seeking to rely in reduction of damages on particulars which Scott v Sampson and Speidel v Plato Films Ltd do not exclude. If this were not so, there is a danger that the jury would be required to assess damages in blinkers, in ignorance of background context directly relevant to the damage which the claimant claims has been caused by the defamatory publication. This is consistent with the sense of what Lord Denning said in Speidel v Plato Films Ltd, where his conclusion was that it was permissible to adduce the evidence in question. Thus, in my view, a defendant is not prevented from taking the sensible course of accepting that the publication means what it says and that it is not on the facts justified, and yet putting in evidence directly relevant facts which in other circumstances might have been ingredients of a defence of justification. It would, I think, be illogical and unfair if this were not so. Evidence in support of a plea of justification which fails is admissible in reduction of damages. But the very same evidence would not be admissible to a sensible defendant who acknowledges that it will not support a plea of justification. What is not permissible is to plead a defence of partial justification which in truth is no defence at all.

65 Sir Christopher Slade in Burstein, who agreed with May LJ, made certain additional observations including:[20]

It is an unsatisfactory and, at least to me, surprising feature of our law of defamation that the limits of the admissible evidence that can be given in mitigation of damages are in some respects so ill-defined. I do not regard the present case as an easy one because the evidence sought to be adduced does not readily fall either within or outside any category dealt with by previous authority.

Gatley on Libel and Slander, pp 850 - 851, para 33.44, states that while the conduct of the plaintiff is a factor that a jury can take into account when assessing damage, '"conduct" in this context does not encompass the general behaviour of the plaintiff; it relates principally to activities that can be causally connected to the publication of the libel of which the plaintiff complains, though it might include more broadly provocative actions by the plaintiff'. Justice obviously requires the admissibility of evidence as to actions by a plaintiff which have directly provoked the libel in question.

66 One relevantly recent explanation of the content and scope of the decision in Burstein appears in the judgment of the Court of Appeal of England and Wales in Warren v The Random House Group Ltd:[21]

[A]lthough we are clear that the 'directly relevant background context' is the best encapsulation within a single phrase of the criterion for admissibility, we agree with the observations of Moses LJ in Turner's case, at paras 87-89, to the effect that, taken on its own, it would give insufficient guidance to judges called upon to apply it. There is no substitute for examination in each case of whether the material qualifies as background context directly relevant to the assessment of the damage sustained by the claimant as a result of the publication, in particular the damage to his reputation in the sector of his life to which it relates and the injury to his feelings. Indeed, as Keene LJ pointed out in Turner's case, at para 60, the claimant's reputation should largely have been repaired by publication of the correction and apology which attends acceptance of an offer of amends, with the result that injury to feelings tends to play an especially prominent part in determination of compensation under the Act. Keene LJ also called for caution in the application of the principle. Then he stated, at para 56:

'If evidence is to qualify under the principle spelt out in Burstein's case, it has to be evidence which is so clearly relevant to the subject matter of the libel or to the claimant's reputation or sensitivity in that part of his life that there would be a real risk of the [court's] assessing damages on a false basis if [it was] kept in ignorance of the facts to which the evidence relates.'

67 It has been observed by this court that '[t]he scope of the decision in Burstein is to some extent uncertain and its application may be difficult in particular cases': West Australian Newspapers Ltd v Elliott.[22] Those observations were relatively recently referred to with apparent approval by the New South Wales Court of Appeal.[23]

68 In substance, the grounds of appeal are as follows:

(a) the learned judge erred in finding that the only matter of provocation that can be raised in the defence to a defamation claim is provocation by defamatory publication by the claimant against the defendant when he ought to have held that evidence of conduct by the claimant that had caused or provoked the publication was admissible in the defence to the claim and that the defendant was at least arguably entitled to raise the matters pleaded in par 15 of the defence (grounds 1 and 2);

(b) the judge erred in finding that the matters pleaded in par 15 of the defence were not directly relevant background context relevant to the damage that the plaintiff claims has been caused by the publication when he ought to have held that the matters pleaded in par 15 were background context relevant to such damage (grounds 3 and 4).

69 In substance, the defendant contends that the matters pleaded in par 15 of her defence raised matters which were reasonably arguable having regard to the decision in Burstein, and that his Honour erred in finding to the contrary.

70 The relevant principles to be applied in relation to striking out pleadings under O 20 r 19 of the RSC were set out in Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd:[24]

O 20 r 19 grants power to strike out such pleadings. It is well recognized that there is a need for caution in exercising this power to ensure that the party whose plea is attacked will not be improperly deprived of an opportunity for the trial of their case by the appointed tribunal: see General Steel Industries Inc v Commissioner for Railways of New South Wales [1964] HCA 69; (1964) 112 CLR 125 at 130. The general principles to be applied were summarised in Mickelberg v 6PR Southern Cross Radio Pty Ltd & Ors [2002] WASCA 270 at [28]- [29] and Kirika v Zurich Australian Insurance Pty Ltd & Anor [2002] WASCA 233 by Wheeler J at [6] (Murray and Miller JJ agreeing):

'• the rule is intended to apply only to cases which are really not arguable and not to cases where under the previous practice demurrer would have been the proper course;

• on the application, not only must all the facts alleged in the statement of claim be accepted as true, but it must be taken for granted that on all other points the pleading is unassailable;

• the rule should not be reserved for those cases where argument is unnecessary to show the futility of the plaintiff's claim. Argument, even extensive argument, may be necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot succeed;
• as a general rule a plaintiff is entitled as of right to have his or her case heard, to have the facts found and then to argue the question of law as it arises before the trial judge upon the facts as found. It is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck out; and
• a court at first instance should be careful not to risk stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie.'

71 The point made in these observations applies equally, with necessary amendments, to the pleading of a defence. The question is not whether the facts pleaded in par 15 of the defence are in themselves sufficient to disclose a reasonable defence to the action, but whether it would be open to the defendant upon that pleading to prove facts at the trial which would arguably be relevant to an assessment of damages.[25]

72 Section 34 of the Defamation Act 2005 (WA) provides:

In determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded.

73 Section 38(1) of the Defamation Act sets out a number of matters which are admissible on behalf of the defendant in mitigation of damages and s 38(2) provides that nothing in subsection (1) operates to limit the matters that can be taken into account by a court in mitigation of damages.

74 Although the grounds of appeal were divided into separate elements of 'provocation' and 'directly relevant background facts' the subject of discussion in Burstein, in oral submissions, the defendant accepted that 'provocation' may at least arguably be seen as one particular aspect of a range of 'directly relevant background facts' which may affect an assessment of damages.[26] In any event, at least grounds 3 and 4 establish error for the reasons outlined below.

75 It may be inferred that at trial the plaintiff will rely on the legal distinction between the shares in TFS of which the defendant was the legal owner, and the shares beneficially owned by the defendant. It will presumably be argued by the plaintiff that any proxy received by the plaintiff had no application to the 375,000 shares beneficially owned by the defendant in respect of which Domenica was the legal holder.[27]

76 Section 249X(1) of the Corporations Act provides that a member of a company who is entitled to attend and cast a vote at a meeting of the company's members may appoint a person as the member's proxy to attend and vote for the member at the meeting. 'Member', in relation to a company, includes, relevantly, a person whose name is entered on the register of members: s 9 read with s 231(b) of the Corporations Act.

77 In light of that legal distinction informing the plaintiff's case, the plea in par 15 of the defence alleged that, as a matter of substance, the plaintiff:

(a) knew that the defendant was the beneficial owner of the parcel of 375,000 shares in TFS under a bare trust, where the trustee was a corporate trustee of which the plaintiff was a director who effectively controlled the decision-making of the corporate trustee;

(b) knew that the defendant had requested the legal interest in those shares to be transferred to her, but had asked her to defer the transfer for reasons relating to his own convenience;

(c) knew that the defendant wished her parcel of beneficially-owned shares in TFS to be voted in favour of his removal as a director of TFS; and

(d) took no steps to transfer the legal title in these shares to her so that she could vote the shares, and otherwise took no steps to have the shares held by the trustee voted in accordance with the defendant's known wishes.

78 Even if the primary judge correctly captured the relevant sector of the plaintiff's life (about which we make no observation), these matters at least arguably raise questions of sharp practice with an eye to self-interest in maintaining his position as director, and are arguably relevant to the circumstances in which the allegedly defamatory communication was made. Evidence of these matters would at least arguably be directly relevant background facts to the alleged defamatory communication. Conversely, it could not be said that at least arguably, those matters were 'unconnected with the subject matter of the defamatory publication' or otherwise involved a mere 'roving inquiry' into aspects of the plaintiff's life.[28]

79 At least arguably, and at least in relation to injury to feelings, an assessment of damages without reference to these matters (which must, for present purposes, be accepted as true) would put the trier of fact 'in blinkers'.[29] It would, at least arguably, result in the court failing to 'ensure that there is an appropriate and rational relationship between the harm suffered by the plaintiff and the amount of damages awarded' within the meaning of s 34 of the Defamation Act.

80 Moreover, this is an area of the law the scope and application of which have been recognised as somewhat uncertain, both by this court and other courts.

81 In these circumstances, the learned judge, with respect, erred in considering that the matters alleged in par 15 of the defence were suitable for peremptory dismissal on a pleadings application.

82 The pleadings application brought by the plaintiff had no merit. Interlocutory disputes about pleadings appear to be a feature of defamation litigation generally, and this case is no exception. The observations of Martin CJ in Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd[30] are pertinent in the present context:

[I]nterlocutory disputes of this kind must be actively discouraged. In many cases, interlocutory disputes, particularly disputes relating to pleading issues, consume very substantial amounts of time and expense on the part of both the parties and the Court. In many cases, the time and expense involved in the consideration and resolution of the interlocutory dispute is entirely disproportionate to its significance to the just and effective resolution of the case as a whole by mediation or trial.

83 Nevertheless, the plaintiff submitted that even if the judge had erred, leave should not be given and the appropriate course would be to allow the trial to proceed without reference to the arguably relevant evidence. If the plaintiff were to succeed, the defendant could raise the point again on an appeal against the final decision, and assuming the appeal was successful in that regard, the parties could then be ordered to litigate damages again in a further hearing.[31]

84 In Allmark v Mossensons (a firm),[32] Pullin JA (Buss JA agreeing) said:

Leave will usually only be granted where the decision below was wrong, or at least attended with sufficient doubt to justify the granting of leave, and if in addition substantial injustice would be done by leaving the decision unreversed. See Wing Luck Foods v Lay Choo Lim [1989] WAR 358 at 360 and Friday v Australian National Airlines Commission, unreported; FCt SCt of WA; Library No 8502; 24 September 1990; Stanley v Layne Christensen [2006] WASCA 56 at [15] and [58]. These are not rules but guidelines. The Court has a residual discretion to do justice in any case requiring leave even if the guidelines are not satisfied. See Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCt SCt of WA; Library No 950185; 22 March 1995.

85 If leave were refused, the trial would likely be conducted without reference to matters arguably relevant to the claim for damages. It would be conducive of inefficiency in litigation, rather than efficiency,[33] to have a truncated trial and a further appeal on the same point if the plaintiff were ultimately successful, with the prospect of a further hearing on damages. It would also, in substance, likely cause prejudice to the position of the defendant in relation to any settlement negotiations prior to trial. A refusal of leave would also effectively reward the plaintiff for a meritless pleading application.

86 In all the circumstances, it is appropriate to grant leave to appeal and the appeal should be allowed.

[1] Wilson v Coxon [No 2] [2015] WASC 197.

[2] Burstein v Times Newspapers Ltd [2000] EWCA Civ 338; [2001] 1 WLR 579.

[11] Primary reasons [52], [54], [74.1].

[13] Primary reasons [74.2] - [74.12].

[21] Warren v The Random House Group Ltd [2008] EWCA Civ 834; [2009] QB 600 [79].

[22] West Australian Newspapers Ltd v Elliott [2008] WASCA 172; (2008) 37 WAR 387 [63].

[23] Channel Seven Sydney Pty Ltd v Mahommed [2010] NSWCA 335; (2010) 278 ALR 232 [265].

[24] Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers - Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [49].

[25] cf Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405, 414.

[27] Primary reasons [74.9]; respondent's written submissions, par 30.

[30] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161; (2006) 33 WAR 1 [2].

[32] Allmark v Mossensons (a firm) [2006] WASCA 127 [26].